—SIMO SÄYNEVIRTA, HEAD OF PLATFORM ENGINEERING – DIGITAL ABB

Role of 5G in Energy and Industrial Revolutions?

World as we know it is being disrupted – at unprecendented rate of change

Energy and Industrial Revolutions

October 2, 2017 Slide 2

Renewable electrification

Smart distribution

Industry 4.0

Collaborative, Flexible Manufacturing

Real-time energy optimization

Smart Cities

E-Mobility

Mobility-as-a-Service

Data centers

Utilities Industry Transport & Infrastructure

Consider these developments

Renewables and storage driving unprecedented change

October 2, 2017Source: Clean Disruption, Volta, Nissan, Tesla

Slide 3

Renewables growth Energy storage price reductions New regulations & incentives

Disruption through new business models

+27%Already over 27% of all energygeneration in Europe comes fromrenewables, while in the US 15%

$350 billionChina recently said it would shut 85 coalplants and instead invest $350 billion inrenewable sources of energy

8-10%Global renewables capacity hasincreased by 8-10% y-o-y since2010 and the trend is to continue,with over 150GW added annually(2/3 of all capacity addition)

$36/MonthAverage American consumes903 kWh/month ⟶~ 30kWh/dayBy 2020 it will cost $36.8/month($1.2/day) for a full day ofelectricity storage

$0SV Startup Volta offering FREE EV chargingin exchange for media rights at prime high-value properties.If this business model succeeds, the EVMARGINAL COST of energy will be ZERO

85%At certain times of year in Germanythe Max hourly variable renewablegeneration rate already above 85%of hourly demand. Result:NEGATIVE ENERGY PRICES

The Green agendaRenewables penetration

Current challenges and changes facing utilities

October 2, 2017 Slide 4

Aging infrastructureNearly 70% of the transformers in

the US are more than 25 years old.1

Transitioning workforce40% of the workforce at America’selectric and natural gas utilities willbe eligible for retirement in the nextfive years6

ReliabilityThere is increasing pressure to

continually improve reliabilityand customer satisfaction.

Spending justificationContinued revenue challenges andregulatory inspection will driveTotex focus and cost constraints.

Cyber securityAttacks on critical infrastructureare increasing in terms ofregularity and sophistication.

Through 2018, 50% of IoT devicemanufacturers will not be able toaddress threats from weakauthentication practices.7

Need for improvedcustomer engagement

Customers expectations of“engagement” are changing.

25 billion devices (not countingsmartphones, tablets or

computers) will be connectedto the IoT by 2020.3

1 Harris Williams & Co. | 2 ARC Advisory Group, November 2014 | 3 Gartner. Predicts 2016: Unexpected Implications Arising From the Internet ofThings. December 2015 | 4 IDC FutureScape: Worldwide Utilities 2017 Predictions | 5 IDC Energy IDC FutureScape: Worldwide DigitalTransformation 2017 Predictions | 6 APPA | 7 Gartner. Predicts 2016: Unexpected Implications Arising From the Internet of Things. December 2015IDC Innovators 2017

Business model disruptionBy 2020 non-utility players will seize

20% of the energy retail market.

2.5 GW of electricity will be generatedby 20% of Fortune 500 companies,

who will wholesale their distributedenergy resource excess power through

utility-independent subsidiaries.4

Renewables penetrationGlobal renewables capacity hasincreased by 8-10% y-o-y since 2010,and the trend will continue with over150GW added annually (2/3 of allcapacity addition).

CostMinimizeà Optimize

PerformanceExceedàMeet or beat

RiskAvoidàManage

$

New challenges for traditional paradigms for control and commerce

Resulting in increasing complexity in Energy System

October 2, 2017EV: Electric VehicleDER: Distributed Energy ResourceSlide 5

Aggregation of DERs for wide-area grid support and markettrading

Aggregation

Intelligence

Generation &Storage

Markets

Behind-the-meter

Managing voltage levels & reactivepower (VAR) with assets owned bythe utility and otherwise

System in which EV sell demandresponse services to the grid

Health Monitor networkparameters & control devicesremotely

Distributed energy resources atcustomer sites

Distribution connected renewablesgeneration and storage

Control in-home appliances toswitch off high-load components(load disaggregation)

Decentralized market platformfor charging EVs

ActiveDistribution

Networks

Load management at customersites through e.g. dynamicpricing

Underlying communication tosupport Smart technology

Collect, store and reportresidential energy use information Regulatory requirements for

more granular pricing schemesand markets

Prosumers locally sell excessenergy from their distributedenergy

Frequency Regulation

Tapping into benefits requires much greater agility that typical today

Smart Manufacturing offers tremendous business potential

October 2, 2017 Slide 7

Industrie 4.0 - DEULaunched in 2011 at the “Hannover Messe” bythe German government. Industrie 4.0combines production methods with state-of-the-art information and communicationtechnology.

National Network for ManufacturingInnovation - USALaunched in 2011 by the US government.Network of research institutes focusing ondeveloping and commercializingmanufacturing technologies.

Made in China 2025 - CHNLaunched in 2015 by the Chinese government,the initiative aims to comprehensivelyupgrade Chinese industry.

Innovation in Manufacturing 3.0 - KORLaunched in 2015, it aims to invest KRW200billion ($172 million) annually from 2015 to2020 to facilitate the building of 1,500 smartfactories by 2020.

“Smart factories havethe potential to add$500 - $1,500 billionannually to the globaleconomy in the nextfive years.”Source: Capgemini 2017

“Smart factories arerevolutionizingmanufacturing byenabling a 7x increasein overall productivityby 2022.”Source: Capgemini 2017

Now – what about evolution of Industrial Automation?

October 2, 2017 Slide 8

Sweden beginning of 20th century – human closing the loop

The evolution of industrial automation

October 2, 2017 Slide 9

USA in 1940’s – programmable controllers

The evolution of industrial automation

October 2, 2017 Slide 10

1970-80s Distributed Control Systems

The evolution of industrial automation

October 2, 2017 Slide 11

Currently – we have digital, layered control systems

Dynamic operating environment shifts Automation Hierarchy…

© ABB GroupOctober 2, 2017 | Slide 12

ERP(Level 4)

MES / CPM(Level 3)

Supervisory control(Level 2)

Regulatory control(Level 1)

Process(Level 0)

…towards a dynamically networked systems architecture

© ABB GroupOctober 2, 2017 | Slide 13

ERP(Level 4)

MES / CPM(Level 3)

Supervisory control(Level 2)

Regulatory control(Level 1)

Process(Level 0)

ERP(Level 4)

MES / CPM(Level 3)

Supervisory control(Level 2)

Regulatory control(Level 1)

Process(Level 0)

Today‘s Hurdles in Machine-to-Machine Communication addressed with

HMIHMI

ControlVendor A

Machine Machine

ControlVendor B

ProprietaryCommunication

Protocol

OPCCommunication

OPCCommunication

§ Multiple communication protocols§ Limited innovation speed

• Locked into proprietary eco systems• High integration effort

Automation and Machine Supplier Machine User

Solution: Unified Communication based on OPC UA over TSN

Example of forming interoperability ecosystems

Recently announced OPC UA over TSN alliance

—Summary: ABB Ability & Digitalization

Customers will increasingly have to deal with very dynamic environments

October 2, 2017 Slide 17

ControlRoomField Operations

CenterBoardRoom

Timehorizon

Businessprocesses

GridPlant

Devices Businessstrategy

Digitalization is the answer for the necessary agility and decision-making velocity

Milliseconds Seconds Minutes Hours Days Weeks Months Years

The need for faster decisions and real-time action requires visibility of the entire business

Partnership with Microsoft to build up a common digital platform across the value networks

ABB Ability™ Solutions & Platform

Slide 18

ABB Ability™

ABB provides efficiencyand scale

ABBdigital

solution

Delivers customer benefit(uptime, speed, yield…)

What

How

ABBdigital

solution

Utilities Industry Transportation &infrastructure

2 October 2017

ABB+Customersolution

Customerdigital

solution

Platform(common technologies for device, edge, and cloud)

Secure digital solutions on-premise, in the cloud, and in an ecosystem

Ecosystems start blending together - Intercloud

October 2, 2017 Slide 19

Fog Cloud Intercloud

5Gnetwork

platforms

Predix Mindsphere

ABB Ability™

Edge

Device

Edge

Device

Cloud

Ecostruxure

v

v

v

v

Winning with Digital takes ability.ABB Ability™.